[Federal Register Volume 75, Number 184 (Thursday, September 23, 2010)]
[Notices]
[Pages 58002-58003]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-23753]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62928; File No.SR-EDGA-2010-09]
Self-Regulatory Organizations; EDGA Exchange, Inc.; Order
Approving a Proposed Rule Change Relating to a Revenue Sharing Program
With Correlix, Inc.
September 17, 2010.
On July 28, 2010, EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to establish a revenue sharing program with
Correlix, Inc. (``Correlix''). The proposed rule change was published
for comment in the Federal Register on August 13, 2010.\3\ The
Commission received no comment letters on the proposal. This order
approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 62683 (August 10,
2010), 75 FR 50017.
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In its proposal, EDGA described real-time analytical tools offered
by Correlix to measure the latency of orders to and from the System,
and also described the terms of the pricing and the revenue sharing
agreement between Correlix and the Exchange. In addition, the Exchange
represented that under the agreement, EDGA will receive 30% of the
total monthly subscription fees received by Correlix from parties who
have contracted directly with Correlix to use their RaceTeam latency
measurement service for the Exchange. According to the Exchange, EDGA
will not bill or contract with any Correlix RaceTeam customer directly.
Pricing for the Correlix RaceTeam product for the Exchange varies
depending on the depth of latency information requested, the number of
unique MPIDs subscribed by the customer, and the number of ports
available for monitoring by Correlix. For boundary-level Exchange
latency information,\4\ the fee will be an initial $1,500 monthly base
fee for the first 25 ports associated in aggregate with any of the
MPIDs selected by the Member for latency monitoring. For each
additional 25 ports associated in aggregate with any of the MPIDs
selected by the Member for latency monitoring, an additional monthly
charge of $750 will be assessed. For match-level Exchange latency
information,\5\ the fee will be an initial $2,000 monthly base fee for
the first 25 ports associated in aggregate with any of the MPIDs
selected for latency monitoring, and an additional $1,000 per month for
each additional 25 ports associated in aggregate with any of the MPIDs
selected for latency monitoring.
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\4\ The time that elapses from an order message's receipt by an
Exchange device until the time that a matching engine
acknowledgement with respect to such order message is transmitted
from the Exchange device back to the user. For market data, the time
measurement will be from the time that the market data engine
receives a market data update until the time that the market data
update is transmitted from the Exchange device back to the user.
\5\ In addition to the boundary-level Exchange latency
information, match level information will also provide further
elapsed time detail for messaging between Exchange internal systems.
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According to the Exchange, Correlix will see an individualized
unique Exchange-generated identifier that will allow Correlix RaceTeam
to determine round-trip order time,\6\ from the time the order reaches
the Exchange extranet, through the Exchange matching engine, and back
out of the Exchange extranet. In its proposal, the Exchange represented
that the RaceTeam product offering does not measure latency outside of
the Exchange extranet. Further, EDGA stated that the unique identifier
serves as a technological information barrier so that the RaceTeam data
collector will only be able to view data for Correlix RaceTeam
subscriber firms related to latency. Accordingly, Correlix will not see
subscriber's individual order detail such as security, price or size;
individual
[[Page 58003]]
RaceTeam subscribers' logins will restrict access to only their own
latency data; and Correlix will not see specific information regarding
the trading activity of non-subscribers.
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\6\ According to EDGA, the product measures latency of orders
regardless of whether the orders are rejected, executed, or
partially executed.
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After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.\7\
In particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\8\ which requires that the
rules of a national securities exchange provide for the equitable
allocation of reasonable dues, fees and other charges among its members
and issuers and other persons using its facilities, and with Section
6(b)(5) of the Act,\9\ which requires, among other things, that that
the rules of a national securities exchange be designed to promote just
and equitable principles of trade, to remove impediments to and perfect
the mechanism of a free and open market and a national market system
and, in general, to protect investors and the public interest, and not
be designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\7\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\8\ 15 U.S.C. 78f(b)(4).
\9\ 15 U.S.C. 78f(b)(5).
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Pursuant to the arrangement, EDGA makes the RaceTeam product
uniformly available to all customers who voluntarily request it and pay
the fees as detailed in the proposal, pursuant to a standard non-
discriminatory pricing schedule. In addition, the Commission believes
that the proposal will further the protection of investors and the
public interest because: (1) Correlix will only be able to view data
related to latency for Correlix RaceTeam subscriber firms; (2) Correlix
will not see a subscriber's individual order detail such as security,
price or size; (3) individual RaceTeam subscribers' logins will
restrict access to only their own latency data; and (4) Correlix will
not see specific information regarding the trading activity of non-
subscribers.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-EDGA-2010-09) be, and hereby
is, approved.
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\10\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-23753 Filed 9-22-10; 8:45 am]
BILLING CODE 8010-01-P